The CEO of Turkey’s largest private lender, İşbank, called for an immediate departure from the government’s economic program, saying that global conditions have made the fight against inflation impossible.
Speaking at the LeadWorld Business and Economy Forum, Hakan Aran, 58, said that Turkey must pivot toward industrial transformation as the current strategy offers no hope for the future. Aran said that the battle to lower prices has hit a wall due to regional wars and energy shocks.
His comments represent a significant critique from the private sector regarding the effectiveness of the government’s long-standing plan to slow inflation.
'There is no room to breathe or to be hopeful other than completing the year and exiting this economic program to start a new one,' Aran said.
‘PROGRAM FAILS THE REAL SECTOR’
Aran acknowledged that the program, now in its fourth year, successfully rebuilt the central bank’s reserves from negative $60 billion to $160 billion. However, he said these gains came at a high cost to businesses and citizens.
'This program is not good for SMEs, industrialists, or businesspeople,' Aran said. 'This is actually a program focused on refilling the state’s coffers and restoring broken balances in the economy. The losers of this program are the real sector and the banks.'
‘EFFORTS YIELD LITTLE RESULT’
The CEO said that even the most aggressive monetary policies would now have a marginal impact on prices because of rising oil and gas costs. He said global supply shocks make high inflation inevitable regardless of domestic interest rate hikes.
Even the most hawkish policies would only contain inflation to around 27%, while abandoning the program would lead to a rate of around 32%, Aran said.
Aran questioned the logic of maintaining a restrictive policy for such a small difference in outcomes. 'The current situation does not allow for such a program to be carried out,' he said. 'When you consider everything, inflation is now unavoidable and it will remain high all over the world.'
